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Wheeeee...won't this be fun????

A growing number of Democrats say they are willing to let the country go off the fiscal cliff if a deal cannot be reached by Jan. 1 that raises taxes on the top two percent of earners while protecting costly entitlement programs.

Their theory in this game of chicken with Republicans is that it will be easier in January to lower taxes for 98 percent of the country while finding the best possible parts of the federal budget to cut — in line with long-held goals of the nation's liberal party. They also think they'll be in a better position to save most, if not all, of massive entitlements like Medicare as well as pet projects.

The fiscal cliff, originally created to force a legislatively-appointed supercommittee to make significant cuts to the federal budget, is roughly $500 billion mix of budget cuts and tax increases.

It includes the expiration of the Bush-era tax cuts and Obama-era payroll tax cut, massive cuts to the military and jobless benefits, and a decrease in Medicare reimbursement rates.

This will send tax on bond interest to 44.6 percent from 35 percent; on capital gains to 25 percent from 15 percent and on dividends to 44.6 percent from 15 percent, Forbes magazine pointed out Monday.

The average family will pay an extra $2,000 to $3,000 in income taxes if Congress fails to reach an agreement before the Bush tax cuts expire on Jan. 1, according to the Congressional Budget Office.

The economy would shrink by 0.5 percent, the CBO has found.

Experts have consistently predicted that the overall economy would take a massive hit if the country goes over the cliff, likely sending it into recession. Still, since July, Democrats increasingly have made the case that it wouldn't be so bad.

Pentagon cuts, they say, would be phased in, and the tax hikes, including the payroll hike, could also be slowed. If this happens, according to The Center on Budget and Policy Priorities, there would be a few weeks at the beginning of 2013 for a deal to quickly be reached.

Sen. Charles Schumer backs Murray, also saying that Democrats can’t cave in. He and other Democrats believe that Obama won a mandate for increased taxes with the presidential election.

"[President Obama] campaigned on it clearly," the veteran New York Democrat said on "Meet the Press." "He didn’t back off it."

While it's not ideal, the founder of Berkshire Hathaway thinks that Obama must be willing to keep pushing for higher taxes on the wealthy, even if it triggers the automatic onset of tax increases and spending cuts on Jan.1.

The U.S. economy, he said, can weather it for a month or two. "We're not going to permanently cripple ourselves," Buffett told CNN last week.

Buffett shrugged off the Congressional Budget Office's warnings that failure to address the fiscal cliff by Dec. 31 could lead to a recession.

"We have a very resilient economy," said Buffett, a long-time Democrat and staunch Obama supporter. "The fact that [lawmakers] can't get along for the month of January is not going to torpedo the economy."

But even as some Republicans waver on taxes, others have renewed the call for no tax hikes.

"A tax increase never created a new job in this country," Rep. Tom Price, R-Ga., said on "Fox News Sunday." "It doesn’t make any sense to us to raise taxes on job creators in this time of economic challenge."

And House Speaker John Boehner, R-Ohio, has said raising tax rates will stymie job creation. But he also said he is willing to raise revenue through tax reform and by eliminating "loopholes" in the tax code.

House Majority Leader Eric Cantor, R-Va., has not said whether he would vote for tax increases.

"I will tell you when I go to the constituents that re-elected me, it is not about that pledge, it really is about trying to solve problems," Cantor said. "And as we know, this election we just went through is very much about, number one, what are we going to do to reclaim a momentum in this economy? How do we get us back to that? And, two, how do you solve a problem?"

Senator Jeff Sessions of Alabama, the senior Republican on the Senate Budget Committee, echoed Cantor, saying in an interview that reforming the outdated tax code could stir up new revenues without raising tax rates.

A CNN/ORC International poll released Monday shows a solid majority of respondents -- two-thirds -- supports the Democratic stance that any agreement should include a mix of spending cuts and tax increases. Of that total, Republicans favor such an approach by 52 to 44 percent.

Even if effects of the cliff felt by Americans could be held off temporarily, the markets may not fare so well.

"Markets are going to go into an absolute tailspin, and I don’t think we want to risk that, especially with leadership right now trying to find a deal," said Gabriel Horwitz, director of the economic program for Third Way, a centrist think tank. "I think the market reaction is going to happen immediately."

"Rather than stop the country from going over the fiscal cliff and preventing the expiration of the 2001 and 2003 tax relief, they are prepared to Thelma-and-Louise the American economy right over the cliff," said Sen. Orrin Hatch, R-Utah, the top Republican on the Finance Committee. "That is an astonishing admission."

William Galston, a senior fellow in governance studies at the Brookings Institution, told CNN that Murray's form of brinksmanship is best avoided.

"To be sure, no one believes that non-agreement by December 31 would be the end of the story. After a period of finger-pointing, discussions would resume," Galston wrote last week in a New Republic opinion piece. "But equally, no one knows how the failure to reach agreement before the end of 2012 would affect the dynamics of the negotiations."

In addition, "we can be reasonably sure ... that national and global markets would react adversely and that businesses, which are already retreating from planned investments in new plant and equipment, would become even more uncertain and risk-averse."

Murray said in July, and again after the election in November, that without increasing taxes for some Americans, Democrats would balk at any deal Republicans propose.

By waiting until January to cut taxes for the bottom 98 percent, rather than increasing taxes for the top two percent, it may be easier for Republicans to support the concept - based on timing and semantics, Murray and other Democrats seem to think.

"We can’t accept an unfair deal that piles all of this on the middle class and tells them they have to support it," Murray said on ABC in November. "We have to make sure that the wealthiest of Americans pay their fair share. If Republicans, many of whom were elected after campaigning against tax hikes, won’t agree, Democrats shouldn’t blink... We’ll start over next year and whatever we do will be a tax cut for whatever package we put together. That may be the way to get past this."

While many Republicans are now saying that they’d be willing to violate Norquist’s pledge under the right circumstances, removing the spectre of actually voting to raise taxes would make it easier for them, she surmises.

Sen. Lindsey Graham said on ABC this Sunday that the pledge was not his major concern, as long as Democrats offer cuts to entitlements and other drains on the budget alongside the tax hikes.

"I will violate the pledge, long story short, for the good of the country, only if Democrats will do entitlement reform," Graham said.

House Minority Leader Nancy Pelosi, D-Calif., told ABC that it’s not her "role to go to the table with a threat... I think it’s my role to go to the table with some ideas, to be receptive to what we can come to agreement on."

However not all Democrats agree that the threat of going over the cliff should not exist.

Sen. Jay Rockefeller, D-W.Va., and Sen. Tom Harkin, D-Iowa, have circulated a letter demanding that Obama start negotiations at a 1-to-1 ratio of spending cuts to revenue increases, putting them in line with many in the party who want to see a harder line taken by Democrats.

Increasing federal revenue is the most important part of any negotiation, and though a deal before reaching the cliff is ideal, Rep. Peter Welch, D-Vt., joined many others in his party and said waiting until January may be the best option.

"If the Republicans can’t see their way to significant additional revenues targeted toward the people who are best off and targeted toward passive income and other things like that, then we’re better off going over the cliff and readdressing this with a better Congress in January," said Rep. Peter DeFazio, D-Ore. "And we would have plenty of time to fix it."

When the one you love becomes a memory, that memory becomes a treasure.

Makes perfect sense to me. Why try and come up with a grand bargain if you're a Democrat? Let the tax cuts expire and the spending cuts go into effect. Then come back with a new congress and pass tax cuts retroactive to the 1st of the year.

I just wish I knew for sure what's going to happen so I could play the market correctly... You could stand to make a lot of money.

"For everyone to whom much is given, of him shall much be required." -- Luke 12:48

Makes perfect sense to me. Why try and come up with a grand bargain if you're a Democrat? Let the tax cuts expire and the spending cuts go into effect. Then come back with a new congress and pass tax cuts retroactive to the 1st of the year.

I just wish I knew for sure what's going to happen so I could play the market correctly... You could stand to make a lot of money.

What would change with a new congress? But I guess if your constituency is the 47% who pay no taxes, no harm no foul applies .

I thought the new Owebama was going to reach across the aisle, just like the 1st 4 years .

No spending cuts will materialize with sequestration ... it will only slow the increase of spending. If sequestration takes place spending increases automatically.

If Bush tax cuts disappear, the revenue of about $82+ billion is enough to run the Fed govt for about 8.5 days. Not really going to be a whole lot of help. Those figures were cited by Mark Levin the other day, but that point was made during the campaign as well, but nobody seemed to be paying attention to that.

Of course, that revenue estimate could be over-stated if more people lose their jobs and won't be paying any taxes or paying at lower rates due to getting less-well-paying jobs.

Net result: tax rates go up, but revenue may not go up as much as anticipated; spending will not decrease as it will automatically increase each year. However, since the Fed tells us there is little or no inflation (do you believe that when you go to the grocery store?), spending should not increase as much as might be expected.

Anybody gonna come up with a budget this year, I wonder?

G.Clinchy@gmail.com"Know in your heart that all things are possible. We couldn't conceive of a miracle if none ever happened." -Libby Fudim

​I don't use the PM feature, so just email me direct at the address shown above.

The more I look around and wonder where the America I love has gone~ the more devestated and depressed I get.

The more I look around and wonder where the America I love has gone.. the more I realize she is still here. I'm sorry for those of you who fail to see. You can choose to try to live in the past. It will not work. Good luck, the change has already happened. JD

One cannot reason someone out of something they were not reasoned into. - Jonathan Swift

Unfortunately the 285 (the dairy expansion noted the additon of about 10 jobs) new jobs will not offset the 650 jobs lost due to the closing of the nuclear plant. Not sure that customer service jobs will have similar wages to the jobs lost in energy.

Guess we need more cheese, but not more energy production?

Interestingly, the dairy expansion is part of a Canada-based cooperative.

G.Clinchy@gmail.com"Know in your heart that all things are possible. We couldn't conceive of a miracle if none ever happened." -Libby Fudim

​I don't use the PM feature, so just email me direct at the address shown above.

Unfortunately the 285 (the dairy expansion noted the additon of about 10 jobs) new jobs will not offset the 650 jobs lost due to the closing of the nuclear plant. Not sure that customer service jobs will have similar wages to the jobs lost in energy.

Guess we need more cheese, but not more energy production?

Interestingly, the dairy expansion is part of a Canada-based cooperative.

Also the 275 are in the call center type business with low pay and horrible benefits. I know plenty of people who have worked for the same type of compnay they go through employees quicker than they can handle them due to the low pay and type of job.

My Father,My Friend,My teacher,and now My Angel~ 04/21/1956-03/21/2011 You will always be missed. I hope to learn half of the stuff you knew.

The more I look around and wonder where the America I love has gone.. the more I realize she is still here. I'm sorry for those of you who fail to see. You can choose to try to live in the past. It will not work. Good luck, the change has already happened. JD

Since words and reason mean NOTHING to those of you, like our friend JD, who prefer to keep their heads buried in the sand and ignore the fact that America is no longer Exceptional-- I thought this little picture might give you some point of view. I tried to keep it simple, see that ship that is still somewhat afloat?? The one with Old Glory on it? Yeah that one---take a good look at her, because she is currently sinking in a mountain of debt, mediocracy and political correctness. Have a good time with your progressive socialist agenda, do make sure to donate your entire income to their cause and get back to me on how it is working out for you and your family. Have a fabulous day.